Global stocks rose for a second day and industrial metals rallied as Chinese inflation slowed more than forecast, reducing pressure on policy makers to tighten credit. The yen rebounded after a three-day slump took it to the brink of 100 per dollar for the first time since 2009.
The MSCI All-Country World Index advanced 0.3% at 10:32 a.m. in New York. The Standard & Poor’s 500 Index rose 0.1% while Alcoa Inc. fluctuated after reporting first-quarter earnings yesterday. Ten-year U.S. Treasury yields lost one basis point to 1.73%. The S&P GSCI gauge of 24 commodities was little changed as gains in copper, lead and zinc were offset by losses in wheat and natural gas. Japan’s currency strengthened 0.3% to 99 per dollar. France’s 10-year bonds fell for the first time in six days.
China’s inflation eased more than forecast last month from a 10-month high as food-price gains ebbed. Federal Reserve Chairman Ben S. Bernanke said economic conditions were far from where he would like them to be. The Bank of Japan last week announced stimulus measures, prompting the yen’s decline. The gain in Treasuries came amid speculation the Bank of Japan’s plan to double its asset purchases may boost buying at today’s $32 billion auction of three-year U.S. notes.
“I think the market is still digesting the Bank of Japan announcement,” Anastasia Amoroso, a global market strategist at JPMorgan Funds, said in a phone interview. The unit manages about $400 billion. “The reaction has been very pronounced in Japan, but not so much in the U.S. or the rest of the world. More and more, investors have to be thinking about what this means in light of the search for yield.”
Commodity, technology and energy companies led the advance in eight of the 10 main industries in the MSCI All-Country World Index.
The S&P 500 yesterday added 0.6% after disappointing jobs data sent it to a 1% loss last week, its biggest drop of the year. Alcoa, the largest American aluminum producer, swung between gains and losses as first-quarter earnings exceeded analysts’ estimates while revenue trailed projections. The shares rallied 1.8% yesterday.
Income at S&P 500 companies probably fell 1.8% in the first three months of the year, the first year-over-year drop since 2009, analyst estimates compiled by Bloomberg show. Three straight years of profit growth helped propel the benchmark index up as much as 132% since 2009 to a record 1,570.25 on April 2.
“Over the last four quarters, analysts have cut their forecasts too aggressively going into reporting season, resulting in consistent beats on lowered expectations,” Savita Subramanian, Bank of America Corp.’s head of U.S. equity strategy, wrote in a note to clients dated April 8. “However, recent data suggest that the magnitude and the proportion of positive surprises may be lower this quarter” compared with the fourth quarter, she wrote. “These headwinds include the deterioration in management guidance, weaker economic data in March, and the rising dollar.”
The Stoxx Europe 600 Index added 0.1%. Mining companies led gains, with Rio Tinto Group, Lonmin Plc and Kazakhmys Plc rising more than 3.5%. The Stoxx 600 Basic- Resources Index rallied 2.7%, the most in a month.
The MSCI Emerging Markets Index rose the first time in seven days, adding 0.6%. The Hang Seng China Enterprises Index of mainland companies increased 1.7%, the most since March 20. The consumer price index rose 2.1% in March from a year earlier, compared with the 2.5% median of 38 estimates in a Bloomberg survey. Russia’s Micex Index climbed 1.1% and Brazil’s Bovespa climbed 0.9%.
Thailand’s baht gained, breaching 29 per dollar for the first time since 1997, as demand for the nation’s bonds rose on Japan easing. The gains were “too fast” and the Bank of Thailand is ready to intervene if the currency’s moves are not consistent with fundamentals, Governor Prasarn Trairatvorakul said today.
France’s 10-year bond yield climbed four basis points to 1.80% after falling to a record-low 1.709% yesterday. Austrian, Belgian, and Dutch bonds also slid and the yield on benchmark German bunds rose two basis points to 1.26%.
Copper rose 2.1% to $7,603 a metric ton and zinc gained 1.4%. China is the biggest buyer of the industrial metals. In Chile, the world’s largest copper producer, miners are holding their first nationwide strike for 24 hours to push for greater job security. West Texas Intermediate oil was little changed at $93.35 a barrel.